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SALT LAKE CITY -- Somewhere across the globe, a competitive archer is aiming a bow and arrow manufactured in Salt Lake City, a heart patient is receiving a stent made in South Jordan, and a genealogist is combing through historical records on a Provo-based website.
In our ever-flattening world, Utah companies are realizing vast opportunities by exporting their products and services overseas. That's not surprising considering roughly 75 percent of the world's purchasing power and 95 percent of its population are outside the United States, according to the Office of the United States Trade Representative.
But what was almost unthinkable 10 years ago — a small business exporting to a market like China, for example — is now possible thanks to technological advances such as the rise of e-commerce sites, among other factors.
Most of the nearly 2,900 Utah companies that export are small and medium-sized businesses.
In fact, most of the nearly 2,900 Utah companies that export are small and medium-sized businesses. By selling their goods abroad — to top Utah export destinations like the United Kingdom, China, Canada and India — these companies are able to diversify their portfolios, weather changes in the domestic economy, and maximize their growth potential.
Last year, Utah exports reached $18.9 billion, a 37 percent increase over 2010's $13.8 billion, according to the International Trade Administration. And World Trade Center Utah has reported that ours is the only state in the U.S. to double its international exports in the last five years.
In addition to boosting individual businesses, global trade is also a boon for local economies. It creates and supports high-paying, highly skilled jobs, invigorating local economies and securing our competitive standing in the future. Direct export-supported jobs linked to manufacturing account for an estimated 94,000 jobs for Utah families. And an export worker earns 150 percent more, on average, than the typical American worker, according to World Trade Center Utah.
Direct export-supported jobs linked to manufacturing account for an estimated 94,000 jobs for Utah families. And an export worker earns 150 percent more, on average, than the typical American worker. -World Trade Center Utah
Of course, doing business abroad has its challenges, including navigating through the unfamiliarity of foreign countries, customs and political instability. But one reason Utah businesses are thriving overseas is because of the strong public and private partnerships that exist in our state to promote international trade and growth.
In my role at Zions Bank, I've seen some of these collaborations between government and business that demonstrate a deep commitment to promoting global trade and strengthening Utah's economy. Zions Bank executives have joined delegations of government and business leaders on trade missions to India, China and Vietnam. These trade missions help forge powerful international ties and establish important business relationships.
Even without stepping outside of the state, local resources abound to help businesses achieve their global aspirations. The nonprofit World Trade Center Utah, for example, provides company assessments, education materials, and contacts. And for more than a decade, Zions Bank has hosted an annual Trade and Business Conference, bringing together some of the top minds in international business to share insights and analysis with local business leaders.
At this year's May 23 conference, former Hewlett-Packard CEO Carly Fiorina will speak on global competitiveness and innovation. Other insightful speakers will include David Neeleman, founder of JetBlue airlines; Max Boot, a leading military historian and foreign-policy analyst; and Stephen Moore, senior economics writer at The Wall Street Journal.
Whether you are a seasoned exporter or you are just starting to think globally, it's an exciting time to be part of Utah's business landscape. Following are some basics for preparing to go global with your business:
Expand your knowledge
- Network and share best practices though organizations such as the World Trade Center Utah and the U.S. Department of Commerce Utah Export Assistance Center.
- Learn about the latest global trends and business perspectives by registering for Zions Bank's Trade and Business Conference on May 23 at the Downtown Marriott in Salt Lake City. The cost of the half-day conference, which runs from 8:15 a.m. to 1:30 p.m., is $35 and includes lunch. Sign up online at www.zionsbank.com/conference or by calling (801) 844-8573. Seating is limited, so early registration is recommended.
Consider emerging markets
- Emerging markets such as China and India offer huge growth potential but they can be more complicated because of distance and language barriers. Do your research to determine which markets are best suited for your business.
Secure financing
- For businesses thinking of entering the export market, financing is available from the U.S. Small Business Administration. This financing — up to $500,000 — can be used for any export purpose, including market development, attending trade shows or trade missions and securing export licenses.
- Once you are prepared to export, the SBA's Export Working Capital Program can help finance your activities up to $5 million. An EWCP loan can be secured before finalizing an export sale or contract to ensure that financing is in place after the order is won.
- Finally, the SBA offers international trade loans — available up to $5 million — that can be used for acquisition, construction, renovation or expansion.
- For larger deals, a financial institution like Zions Bank with designated authority can use its Export- Import bank to increase loan limits to $10 million.
Understand letters of credit
- If you cannot secure a foreign buyer's payment in advance, a letter of credit can help. Your buyer's bank will issue the letter of credit in your name. Essentially, the bank is guaranteeing payment to you, the seller, by the buyer. Your bank can help with this process in a number of ways. Another important function of a letter of credit is that it can enhance your ability to obtain financing, as most banks will not lend against foreign receivables.
Mull over pricing
- Another key consideration when exporting is whether to price your product in U.S. dollars or local currency. One advantage to pricing in local currency is that your buyer is not penalized by a conversion rate. This can make you more competitive and, in some cases, reduce your cost.
- You may find a multi-currency bank account useful because it allows you to deposit multiple types of foreign currency in the same account and make payments from the account without having to convert to U.S. dollars every time.
